Netflix’s Android Move is Better Late Than Never

The strategy could keep the stock on a tear

   

Netflix’s Android Move is Better Late Than Never

In a belated move, Netflix (NASDAQ:NFLX) recently announced a rollout of its movie streaming application for Google’s (NASDAQ:GOOG) Android mobile platform. The application download is free but the service is subscription-based.

Typically, getting their online streaming application to the most popular smartphone operating system in the world should have been a no-brainer for Netflix.

However, there were issues. According to a company blog post, support was held up due to lack of standard streaming playback features. Because Android is an open system (as opposed to Apple’s (NASDAQ:AAPL) closed iOS software), it has had a fairly unchecked (and unplanned) growth. This had led to development of multiple standards and versions. A product team member at Netflix says that “in the absence of standardization, we have to test each individual handset and launch only those that can support playback.”

Now that the company is ironing out is Android support problems, what does this mean for Netflix itself?

More revenue, for starters. The company has already been on a roll. It reported an 88% surge in first-quarter profit to $60 million on the back of subscriber growth for its services. Similarly, its stock price has already soared by 38% since the start of this year. The latest move might send it even higher.

This is because support for Android devices is a double bonus for Netflix.

First, it gives Netflix another distribution channel for its services. The movie streaming site’s app on the iPhone is already among the most popular, despite the presence of other movie rental apps such one owned by Blockbuster. This is because Netflix lets people watch movies through online streaming without having to download the entire movie first.

Second, integration with Android gives the company a first-mover advantage. Right now, well-known and popular movie applications from the Internet such as Hulu are absent on Android. Netflix’s move will help it iron out support problems and, more importantly, customize its strategy for Android. As a start, the company has already priced its service cheaper by a dollar on Android as compared to its Apple service.

Netflix’s Android move might end up being a win-win situation for the company as well as users.


Article printed from InvestorPlace Media, http://investorplace.com/2011/05/netfixs-android-move-is-better-late-than-never/.

©2014 InvestorPlace Media, LLC

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